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eCommerce is India’s fastest growing and most exciting channel for commercial transactions. Indian ecommerce is growing at an annual rate of 51%, the highest in the world and is expected to jump from USD 30 billion in 2016 to USD 120 billion in 2020. (Source: ASSOCHAM-Forrester study paper.) The retail sector is also showing a promising trend of 11% CAGR and is expected to reach USD 1 trillion by 2020.
India eCommerce Statistics:
Capital: New Delhi
Population: 1.25 billion
Currency: Indian Rupee
Language: Hindi, English
With annual additions of 25 million new internet users, India has an Internet user base of 400 million in 2016.
Current eCommerce Market Trends in India:
eCommerce has made it easier for top American brands to reach Indian customers, and has emerged as one of the fast-growing new trade channels available for the cross-border trade of goods and services. eCommerce market in India is likely to touch USD 38 billion marks in 2016 showing 67 per cent increase over the USD 23 billion revenues for 2015. There is a growing appetite for American brands that are doing well in several categories including lifestyle products, consumer electronics, clothing, footwear and accessories, health and beauty, household goods, art and collectibles, event tickets and online music.
eCommerce in India can be broadly categorized as- Domestic and Cross-Border, B2B and B2C, Marketplace and Inventory based and lastly Single brand and multi brand. The advent of technology enabled innovations such as Digital Payments, Hyper-local Logistics, Analytics driven Customer Engagement and Digital Advertisements have enabled the ecommerce industry to grow at a much faster rate. Other Government initiatives such as Digital India, Skill India, Start up India and Make in India are contributing to the growth of the ecommerce industry.
Domestic eCommerce in India (B2C):
The presence of international marketplace players in India like Amazon, eBay and others competing alongside the domestic marketplace operators such as Flipkart and Snapdeal, as well as with inventory led e-tailers, have made India’s domestic ecommerce sector highly competitive. Unlike traditional retail, trade entry barriers in this sector are fewer and several etailers have established product specific online stores. Omni Channel retailers such as Shoppers-stop, Reliance, Croma etc. have also embraced ecommerce as another channel to increase sales and their digital footprints. In some cases e-tailers are tying up with exclusive American brands to sell U.S. products on their platforms. Additionally, omni-channel retailers are also keen to import leading American brands and sell them via ecommerce.
Cross- Border eCommerce:
The U.S. is one of the top ten countries for cross-border shopping for Indian buyers. Automotive, Baby supplies, Toys, clothing, footwear and accessories, jewelry, watches, cosmetics, health products and digital entertainment and educational services are some of the leading categories for cross-border B2C ecommerce. Some of the challenges restricting growth of cross-border ecommerce are high shipping cost, import duties and complexities in returns and exchanges.
Business to Business eCommerce (B2B):
With an objective to tap the huge potential in the B2B ecommerce market in India, leading B2C companies have started to build their own platforms for small business owners and traders. More and more companies and SMEs are buying and selling online and plan to shift procurement transactions through internet rather than the erstwhile Electronic Data Interchange (EDI).Understanding this untapped potential of the B2B ecommerce industry, the government has allowed 100% FDI in B2B ecommerce which has enabled global successful B2B ecommerce companies such as Walmart and Alibaba show interest in the India B2B ecommerce industry.
The Indian B2B ecommerce market potential is valued at USD 300 Billion in 2014 and is expected to reach USD 700 Billion by 2020. India has 14 million retailers fueling USD 525 billion market. The higher profitability in the B2B segment can be result of lack of heavy discounts, greater emphasis on quality rather than on price, and higher volumes of purchases etc. However, the present B2B has many irritants for rapid growth of B2B ecommerce. The taxation policy specifically VAT rules make the inter-state transactions very complex. Projected implementation of GST with effect from April 2017 is expected to resolve this to some extent.
eCommerce Consumer Services in India:
There is a new trend of emerging ecommerce aggregators aiming to digitize several offline services to create a convenient ecosystem for consumers. Below is a list of service providers by industry group:
- Tourism: makemytrip; Goibibo; Yatra; IRCTC
- Education: EduKart; Meritnation
- Healthcare: Portea; Healthkart
- Entertainment/ Ticket booking: Netflix.com; bookmyshow.com
- Real Estate: MagicBricks; Housing
Mobile eCommerce in India:
- Mobile ecommerce (m-commerce) is growing rapidly as a secure supplement to the ecommerce industry.
- Industry leaders believe that m-commerce could contribute up to 70% of their total revenues.
- India has surpassed the U.S. to become the second largest market for smartphones after China.
- The number of smartphone users is expected to reach 650 million by 2019.
- One out of three phones purchased in India was sold via online channel in India's Tier 1 and Tier 2 cities.
Digital Advertising in India:
- The digital advertising spends were about 12 per cent of the total advertisement spends in the country with ecommerce as leading sector followed by Telecom and BFSI.
- Digital advertising is expected to cross USD 3.5 billion in 2020.
- Government of India has recently introduced 6 % equalization levy informally known as “Google Tax” to indirectly tax international internet companies like Google and Facebook operating in India by adding a levy on payments made to them for digital advertising space or services for online advertisements.
Social Media in India:
Facebook and Twitter are the most popular social media sites.
Major Buying Holidays in India:
- Diwali (Autumn)
- Dussehra (Autumn)
- Rakhi (Summer)
- Christmas (The last week of December)
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